• Apr 26th 2010 at 7:00PM
  • 61
Beijing area Buick dealer – Click above for high res image gallery

Over the course of the 20th century, the so-called "developed world" changed faster than at any time in recorded history, but not all parts of the world changed at the same pace. Late in the century some regions attempted to catch up, most notably China and India. In the process of doing so, they didn't follow in the footsteps of their predecessors and cultural differences have meant that some things have been a bit different – including automotive retailing.

During our visit to China for the Beijing Motor Show, Buick offered to take us on a visit to a local dealership to see how things are done a bit differently. At first glance, the Buick dealer we visited on the northwest outer reaches of Beijing didn't appear radically different from what you might encounter in the United States. A somewhat small showroom (at least compared to some of the larger American stores we've seen) contained eight cars, including each of the market's currently available models. Read on to see how things diverged.

Photos by Sam Abuelsamid / Copyright ©2010 Weblogs, Inc.

Shanghai General Motors started selling cars in China in 1998 and sold fewer than 20,000 cars in 1999. By 2009, sales had grown to over 1.83 million units and are on target to top two million this year. Because private ownership of cars in China is a relatively new concept, an enormous percentage of the customers picking up new rides are doing so for the first time. We met two customers in the showroom during our visit.

One gentleman was a 41-year-old employee of a construction company in Beijing who just got his driver's license a year ago. He bought a new LaCrosse last year based on the recommendation of friends. Because of his inexperience (and the relative inexperience of most Chinese drivers) he wanted what he felt would be a safe car. Word-of-mouth promotion is nothing new, but it's particularly important in China. What's different in China is what happens at time of sale.

In the United States, the vast majority of new car sales are financed. Very few people buy cars for cash. Precisely the opposite is true in China. Over 90 percent of new car sales are conducted for cash. When we say cash, we are not just talking about paying in full at purchase time with a check, but actual stacks of cash. Customers will typically walk in with a large bag or case filled with bundles of Yuan. The largest Chinese note is 100 Yuan, so imagine paying up front for a $40,000 (about 280,000 Yuan) LaCrosse. It's a very peculiar phenomenon.

Another factor that's different in China is the number of sales per dealer. Shanghai GM has 385 dealers around the country including 17 in metropolitan Beijing. The one we visited sold an astonishing 2,513 cars in 2009. Among the other dealers in Beijing, Shanghai and other large cities it's typical to sell over 2,000 cars per year. Those are the kinds of numbers that make even Toyota dealers in the U.S. look like laggards when they sell 1,000 cars a year. In contrast, American Buick dealers typically sell less than 100 cars a year.

Buicks sell so fast in China that on average they spend less than 20 days on the lot. The one exception to that is the Enclave, which became available in China in 2009. Because they're imported from the U.S. the Enclave is quite expensive and only available by special order. It can take from three to six months to get an Enclave, and the customer we met earlier came in and bought his LaCrosse the same day – a standard practice, we're told.

The other thing most customers do is come back to the same dealership for service. This particular dealership has about 80-100 customers per day and the service department includes a full body shop in addition to the usual repair and maintenance facility. In order to help customers dealing with the aftermath of a crash, there are representatives of the two largest insurance companies on site whenever the service department is open. The insurance representatives work with the service department to process claims and get the cars back on the road.

The combination of continued rapid growth in China and a sales collapse in North America and Europe resulted in China surpassing both as world's largest car market in 2009. Nevertheless, there are still only a tiny fraction of Chinese that own cars with only about 50 cars per 1,000 people. Chances are things will change even more in the coming years as the market continues to grow. Exactly how they will change we can only guess...

Our travel and lodging for this media event was provided by the manufacturer

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    • 1 Second Ago
      • 5 Years Ago
      This country would be better off if people still made big purchases this way instead of financing that fools them into thinking they can really afford something.

      Also, the Regal has no Chinese influence. It's a rebadged Opel from Germany with a different grille. It was concieved for the German/Euro market. GM took it global with Buick.
        • 5 Years Ago
        Most of this country would be better off if almost everything was bought with cash, but its always been the American way to live beyond your means. That is why we had the housing market crash, and why we had to bail out the banks, and automakers. Because people had to have their toy, car, house now now now.
        • 5 Years Ago
        Agree with all the posts above in principal, especially the one about critical thinking. Talking of which - you guys are incredibly amazingly naive - 90% of Chinese are buying with cash because all that cash is illegal - bribes, black market, extortion. This is not hard earned money, that's for sure, don't be stupid painting Chinese as exemplars for Americans.
        • 5 Years Ago
        Buying with credit just makes demand higher, meaning they can charge more. If everyone paid with cash, cars would be cheaper. Same with houses, or a college education.

        I totally agree. Easy credit is the root of a lot of problems in America. It's all that instant gratification. It's because we all have underdeveloped dorsolateral prefrontal cortices ... we don't delay gratification. That's because we feed our children foods high in saturated fats and high fructose corn syrup and basically starve their brains of nutrients.
      • 5 Years Ago
      Ok, if Buick sold that hot looking silver hatch here in the states, even I'd buy one. Hello? GM? RIP Saturn Astra.
      • 5 Years Ago
      all you guys talking about the chinese saving more are not wrong, but it's really not relevant here. these cash buyers at the show are very often mistresses or children of businessmen or govm't officials who took advantage of the widespread corruption to get rich fast. these people do not need to save. in fact they probably want to get rid of all the cash so that no one can trace the bribe.
        • 5 Years Ago
        Right. I'm sure those people account for over 90% of Chinese car buyers. *rolls eyes*
      • 5 Years Ago
      Buick is a status symbol in China.
      • 5 Years Ago
      why is this article removed from autoblog homepage?
      • 5 Years Ago
      The LaCrosse is the one with Chinese influence. The Shanghai team did the interior and influenced the exterior.
      • 5 Years Ago
      If people in the US were smart they would start paying cash for cars.
        • 5 Years Ago
        Hey now, we got Cash...for Clunkers (at least). ;-)
        • 5 Years Ago
        ...and if they were really smart they would pay cash for used cars.
      • 5 Years Ago
      Whoops just noticed that is the service desk...maybe it DOES mean accident reception...
      • 5 Years Ago
      tha's an awful translation~~
      it should be


      however it's unlikely happened in real conversation that we call dealer homie conducting serious business
      • 5 Years Ago
      Buying a car in cash is not so extraordinary when the Chinese save much more of their income than Americans do. Also, you have to remember that people buying a car outright in China are the upper crust, at least equivalent to upper middle class in the US. Whereas here, almost every single household has a vehicle, and a lot of them have several. If China had the same level of vehicle ownership we'd see them finance vehicles at lot more.

      Also, a basic car in the US will run you $10-13k. In China, a basic car brand new will run you $4-5k. Much easier to pay in cash for a basic car over there.
      • 5 Years Ago
      I agree with the vast majority of you guys.
      *live within your means*

      I'm guilty of living just outside my means...but I have since fixed that. It all started nearly a year ago, where I began to get real upset about government spending...then I realized I was being a hypocrite, since I too was buying things I couldn't truly afford..... and I hate hypocrites.
      So I stopped. In under a year, I have finished paying off my (used) car, and have a few grand in the bank, a number that will continue to grow.
      Which means I can ounce again be angry at DC for spending us into oblivion.
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